AUD/NZD extends gains to near 1.1070 despite upbeat NZ Trade data

• AUD/NZD has recovered sharply to near 1.1070 despite better-than-projected NZ Trade data.
• NZ Exports have accelerated in spite of external demand shocks.
• Weaker Australian labor market data has made RBA policymakers’ job more tedious.

The AUD/NZD pair has extended its recovery to near 1.1070 despite the release of the downbeat NZ Trade data. In early Tokyo, the asset sensed a stellar buying interest after testing monthly lows at 1.1044. A revisit to monthly lows with less selling confidence has infused fresh blood into the aussie bulls.

The annual NZ fiscal deficit has widened by $11.95M, lower than the projections of $13.19B and the prior release of $12.5B. And, on a monthly basis, the fiscal deficit has widened by $1,615M against the projections of $2,205M and the former figure of $2,625M.

Imports in the kiwi zone have dropped to $7.64B against the figure of 47.92B reported earlier exports have advanced to $6.03B vs. the prior figure of $5.29B. While major countries are facing the headwinds of external demand shocks, kiwi’s exports have accelerated firmly.

This week, kiwi’s inflation data also impacted the cross. Price pressures remained extremely elevated led by rising input prices used in manufacturing activities. This bolstered the odds of the continuation of the current pace of rate hike by the Reserve Bank of New Zealand (RBNZ). It is worth noting that RBNZ Governor Adrian Orr has already increased the Official Cash Rate (OCR) to 3.50%.

On the Australian front, weaker job additions reported by the Australian Bureau of Statistics for September month has made the Reserve Bank of Australia (RBA) policymakers’ job more cumbersome now. Price pressures in the Australian economy have not been exhausted yet and subdued employment opportunities will not allow RBA Governor Philip Lowe to tighten policy further unhesitatingly. In September, the Australian economy created only 0.9k jobs vs. the projections of 25k.